This Republican Economy

What should be done about the economy? Republicans claim to have the answer: slash spending and cut taxes. What they hope voters won’t notice is that that’s precisely the policy we’ve been following the past couple of years. Never mind the Democrat in the White House; for all practical purposes, this is already the economic policy of Republican dreams.

So the Republican electoral strategy is, in effect, a gigantic con game: it depends on convincing voters that the bad economy is the result of big-spending policies that President Obama hasn’t followed (in large part because the G.O.P. wouldn’t let him), and that our woes can be cured by pursuing more of the same policies that have already failed.

For some reason, however, neither the press nor Mr. Obama’s political team has done a very good job of exposing the con.

What do I mean by saying that this is already a Republican economy? Look first at total government spending — federal, state and local. Adjusted for population growth and inflation, such spending has recently been falling at a rate not seen since the demobilization that followed the Korean War.

How is that possible? Isn’t Mr. Obama a big spender? Actually, no; there was a brief burst of spending in late 2009 and early 2010 as the stimulus kicked in, but that boost is long behind us. Since then it has been all downhill. Cash-strapped state and local governments have laid off teachers, firefighters and police officers; meanwhile, unemployment benefits have been trailing off even though unemployment remains extremely high.

Over all, the picture for America in 2012 bears a stunning resemblance to the great mistake of 1937, when F.D.R. prematurely slashed spending, sending the U.S. economy — which had actually been recovering fairly fast until that point — into the second leg of the Great Depression. In F.D.R.’s case, however, this was an unforced error, since he had a solidly Democratic Congress. In President Obama’s case, much though not all of the responsibility for the policy wrong turn lies with a completely obstructionist Republican majority in the House.

That same obstructionist House majority effectively blackmailed the president into continuing all the Bush tax cuts for the wealthy, so that federal taxes as a share of G.D.P. are near historic lows — much lower, in particular, than at any point during Ronald Reagan’s presidency.

As I said, for all practical purposes this is already a Republican economy.

This morning on “This Week,” New York Times columnist Paul Krugman called Rep. Paul Ryan’s proposed budget plan a “fraud” as Romney campaign senior advisor Eric Fehrnstrom confirmed his candidate’s support for the plan that would trim trillions in federal spending over the next decade.
“The Ryan plan — and I guess this is what counts as a personal attack — but it isn’t. It’s not an attack on the person; it’s an attack on the plan. The plan’s a fraud,” said Krugman. “And so to say that — just tell the truth that there is really no plan there, neither from Ryan, nor from Governor Romney, is just the truth. That’s not — if that’s — if that’s being harsh and partisan, gosh, then I guess the truth is anti-bipartisanship. ”
Krugman, who has been critical of the Ryan, R-Wis., plan in the past, was responding to the Fehrnstrom, who confirmed Romney’s support for the plan after ABC News’ George Will asked Fehrnstrom to clarify his candidate’s stance on the Ryan proposal.
“He’s for the Ryan plan. He believes it goes in the right direction. The governor has also put forward a plan to reduce spending by $500 billion by the year 2016,” said Fehrnstrom. “In fact, he’s put details on the table about how exactly he would achieve that. So to say he doesn’t have a plan to — a plan to restrain government spending is just untrue.”
Krugman defended the president’s budget plan when asked by Fehrnstrom if he preferred it over the Ryan plan.
“I mean, the president — at least it’s — you know, I don’t approve of everything, but there are no gigantic mystery numbers in his stuff. We do know what he’s talking about. His numbers are — you know, all economic forecasts are wrong, but his are not — are not insane. These are — these are just imaginary,” he said.